Goldman Sachs launches OTC crypto trading

TL;DR Breakdown

• Goldman Sachs announced that it carried out its first OTC crypto options trade.
• The transaction was made with Galaxy Digital.
• With the development, Goldman is the first US bank to offer OTC crypto options.

Traditional financial institutions are increasingly joining the crypto adoption wave. Goldman Sachs has revealed that it facilitated its first OTC (over-the-counter) crypto transaction in a trade with Galaxy Digital.

Goldman Sachs set to introduce OTC crypto Bitcoin trading

As reported by CNBC, Goldman traded a bitcoin-linked instrument called a “non-deliverable option” with the crypto merchant bank. The success of the inaugural trade brings Goldman closer to becoming the first major US bank to trade an OTC crypto transaction. 

The development has been hailed as a huge step forward for crypto adoption due to the nature of the OTC crypto trading market. CNBC explains that unlike more established crypto derivatives products, like the CME Group bitcoin products, becoming an OTC crypto trading desk means that the globally significant bank is taking greater risk.

The consequence of Goldman’s position is that it is likely to attract a lot of institutional investors to the product. Goldman’s Asia Pacific head of digital assets, Max Minton, told CNBC that the bank is proud of the achievement as it is key to broadening its capabilities for crypto assets. 

“We are pleased to have executed our first cash-settled cryptocurrency options trade with Galaxy. This is an important development in our digital assets capabilities and for the broader evolution of the asset class,” he said. 

Galaxy Digital, which is one of the crypto native firms that is a powerhouse of onboarding institutional investors to crypto, also praised the development. Damien Vanderbilt, Galaxy’s co-president, voiced that it represents the “first steps that banks have taken to offer direct, customizable exposure to the crypto market on behalf of their clients.” 

Goldman’s storied foray into crypto

The global bank is not a newcomer in the crypto space. Just last year, it reinstated its crypto trading desk within its Global Currencies and Emerging Markets division after a three-year break. The service already caters to the needs of its lionized roster of clients that includes hedge funds, endowments, and other institutional money managers. 

The bank has been shaping up to expand the service this year. Goldman’s recent SEC filing disclosed that it plans to offer its larger clients access to Ether through a tie-in with Galaxy Digital’s Ethereum fund. 

There were also rumors of the bank operating an in-house stablecoin. However, Goldman clarified that it had no plans of issuing a coin, but was instead looking to work with other institutions on stablecoins.